Encryption Author Seeks Probe Details

Published 4:00 am, Monday, May 3, 1999

Phil Zimmermann beat the U.S. government in an epic three-year skirmish over encrypted software, and he's ready for another fight.

Zimmermann, 45, this week plans to sue Uncle Sam in federal court in San Francisco to find out how far it went to investigate him.

He wants to know if the feds wiretapped his phone and tailed him and his friends. Zimmermann is still fuming after he was detained and interrogated by government officials in 1994 at Dulles Airport in Washington, D.C., without a lawyer present. He was released after several nerve-racking minutes.

"I want to know what the government knows about me, and the measures they took," said Zimmermann, who wrote a free software program called Pretty Good Privacy, or PGP, which permits computer users to encrypt files for secure transmission.

The program was posted as freeware on the Web in June 1991, where it was repeatedly copied and circulated internationally. "It was my part of my human-rights campaign to make it simple and inexpensive to send scrambled messages," Zimmermann said.

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While PGP won fans on the Internet, the data-scrambling software violated U.S. export laws.

Federal law enforcement and national security agencies, fearful that encrypted software will be used by criminals or hostile foreign governments, have sought to maintain strict controls on scrambling technology.

In 1993, Justice officials began a grand-jury investigation of Zimmermann. Their case became a cause celebre for high-tech companies and civil-liberties groups, who lobbied the Clinton administration to soften its stance on encryption technology.

The government abruptly dropped its grand-jury investigation in 1996. This month, a bipartisan group of U.S. senators introduced legislation to relax U.S. export controls on encryption.

Zimmermann, now a senior fellow at Santa Clara's Network Associates, which bought PGP in December 1997, isn't appeased.

For the past two years, he unsuccessfully sought information on the scope of the probe from the Federal Bureau of Investigation; National Security Agency; U.S. Customs; and the Justice, Defense, State and Commerce departments. His Freedom of Information Act filing was rejected, because the government conducted a grand-jury investigation, sealed to the public. All he got were newspaper clippings about his case from the State and Justice departments.

Zimmermann's lawyer is Cindy Cohn, who successfully defended former Berkeley mathematician Daniel Bernstein in his 1997 encryption case against the feds.

Bernstein, a former University of Califor nia at Berkeley graduate student, was prohibited by the government from publishing his encryption and decryption code -- "Snuffle" and "Unsnuffle" -- on the Internet. Claiming his freedom of speech was violated, Bernstein took the government to court and won in U.S. District Court. Government officials are appealing the decision in the 9th U.S. Circuit Court of Appeals.

BELIEVE IN MAGIC?

Evidently, Internet-hungry investors do.

Marimba -- a Mountain View startup that boasts that its products "distribute and update" software over the Internet (whatever that means) -- had a market value of $1.51 billion after its first day of trading last Friday.

The 3-year-old offshoot of Sun Microsystems lost $5.7 million on sales of $17.1 million last year, compared with a shortfall of $7.7 million on sales of $5.6 million in 1997.

Enchanted with Marimba's dot- com legacy, day traders ignored its bottom line and snapped up shares, boosting the company's opening day price $40.25, to $60.25 per share.

The Internet feeding frenzy has become downright insatiable.

CAUGHT IN THE WEB

The meltdown at two of America's most venerable companies spells major problems for Fortune 500 firms without an Internet strategy.

Shortly after Compaq Computer Corp. CEO Eckhard Pfeiffer got the heave ho, Borders Group closed the book on CEO Philip Pfeffer after a mere five months on the job. Both were booted because they clung to a traditional storefront approach while their rivals -- specifically Dell Computer Corp. and Barnes & Noble -- rocketed into cyberspace.

"Every brick-and-mortar firm has to examine its presence on the Net out of self preservation," said Ken Cassar, digital-commerce analyst at Jupiter Communications in New York. "You almost have an obligation to your shareholders to announce a plan -- whether it's profitable or not."

Sean Maloney, Intel's director of worldwide sales and marketing, said an e-commerce strategy for business-to-business transactions is "as crucial as phones and faxes."

Complicating matters is the cat- quick nature of the Internet market, which puts a premium on fast, correct decisions. Companies that don't adjust are often left in the dust.

Romance Classics (www.romanceclassics.com) and Brides Magazine are organizing a WWWedding on June 29 in hopes of marrying 1,000 couples in a fake ceremony "for the fun of it," spokeswoman Darcey Agostino said.

Though impressive, the faux online nuptials fall short of the record of 40,000 couples, set by the Rev. Sun Myung Moon's Unification Church at Seoul Olympic Stadium this year.

Anyone is eligible for the modem matrimony, where partners can choose a dress and tux, rings and invitations from the online site. Each happy couple gets an ersatz wedding certificate.

But the biggest prize has nothing to do with cash: It's a daylong date with a dead ringer for Lara Croft, the digitally endowed heroine of the Tomb Raider video game. The magazine is accepting applications through June 30.

You don't suppose an exceptional date with Lara's look-alike could lead to another online wedding . . .

KOSOVO AID

Yahoo (auctions.yahoo.com) is organizing a celebrity auction expected to raise $3 million for Kosovo refugees. Among the goodies: a Michael Jordan autographed basketball; an autographed box set and backstage passes from Tom Petty; and "Star Wars" collectibles, including a life-size storm trooper figure. The auction runs through Wednesday.